Small Business, Innovation, and the Importance of Long Term SBIR and STTR Reauthorization NOW

At times like these, when the need for innovation, is greater than ever, the SBIR and STTR Programs hold the keys to the growth of new and innovative products in the U.S. small business sector. Funding through SBIR and STTR awards provides critical support for new discoveries in both the small business and university research communities across 11 key Federal Agencies and unlocks the vault to bring out new innovations right here at home.

Small Business Innovation Research Program (SBIR)

SBIR is a highly competitive program that encourages small business to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated and the United States gains entrepreneurial spirit as it meets its specific research and development needs. (source: SBA.gov)

Legislative History: The SBIR program was established under the Small Business Innovation Development Act of 1982 (P.L. 97-219). The SBIR reauthorization of 1992 (P.L. 102-564) doubled the set-aside rate to 2.5 percent for SBIR and 0.3 percent for STTR. These are the levels at which agencies are currently required to allocate funds from their total extramural R&D budgets. The subsequent reauthorization of 2000 (P.L. 106-554) again extended the program authority until September 30, 2008, for SBIR and until September 30, 2009, for STTR. Since 2008/2009, the SBIR program and STTR programs have has been extended multiple times via a string of temporary extensions that provide a short-term fix and keep the program going for short periods. Then we start all over again with more committee meetings, more hearings and then requiring another reauthorization. Now is the time for Congress to take a long term view and support long term if not permanent SBIR/STTR reauthorization.

NOW is the time for a long term Reauthorization of the SBIR/STTR

Recently, a bipartisan group of 11 Senators sent a letter to the committee chairs and ranking members of the Senate and House Small Business Committees urging passage of a long-term reauthorization for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. The SBIR program currently is only authorized under the continuing resolution passed in late-September to keep various government programs running through Nov. 18.

This latest extension is the 13th in a long string of failures to pass a long-term reauthorization. The Senators’ letter is aimed at urging the House to come to the table and accept the compromise legislation crafted by the Senate Committee on Small Business and Entrepreneurship which is supported by all major stakeholder groups including AZBio, BIO and the NSBA.

Our Arizona biosciences sector demonstrates how to accelerate innovation and job growth and offers insight on how Washington can keep things moving forward faster by activating its “collaborative gene.”

These days tales of economic vitality are few and far between making Arizona’s bioscience sector an inspiration to all as the nation focuses on jobs and economic recovery.

Thanks to a coordinated plan developed in 2002 and supported by leaders from Arizona’s healthcare industry, corporations, government, and universities that has been led by the Flinn Foundation with support from Battelle, Arizona is moving forward faster in economic development, job creation and bioscience research.

From 2002 until today, Bio jobs in Arizona have grown 32%, the number of Bio firms including research, manufacturing, testing, medical labs, and healthcare delivery systems have grown 28% and research partnerships with the National Institutes for Heath has increased 65%. Arizona bioscience organizations now generate $21 Billion in annual revenues and $765 Million in state and local taxes.

Fueling Growth

Arizona’s impressive progress is not the result of short term thinking, one-time investments, or partisan politics. It is the result a community committed to working together to build a world-class research base, support commercialization efforts, and migrate the latest discoveries from the bench to the bedside in a manner that is both translational and transformational not just for our industry but for our community as a whole called the Arizona Bioscience Road Map. Community investments statewide include 7 new bioscience incubators and accelerators, 14 new research institutes, 16 new bioscience schools and educational programs and the attraction of investments from global leaders in healthcare and the biosciences who have elected to locate or expand operations here and now call Arizona home.

With each new addition Arizona picks up more speed. Fueling the progress is Arizona’s ‘collaborative gene’ an attitude and a commitment to working collaboratively to initiate new programs, overcome challenges and achieve shared goals.

As shown in the image above, NIH grants (many through the SBIR/STTR programs) are a key growth enabler. We need a long term view and a long term commitment to keep accelerating growth in innovation, in companies, and in jobs.

SBIR Reauthorization : Background

The Small Business Innovation Research (SBIR) program was created on July 22, 1982, to provide support to small, high-tech firms that play a role in technological advancement and to increase private-sector commercialization of innovation derived from Federal research and development (R&D). Federal agencies with extramural R&D budgets of more than $100 million are required to administer SBIR programs using an annual set-aside of 2.5 percent for small companies to conduct innovative research or R&D that has potential for commercialization and public benefit. Currently 11 departments have SBIR programs, and separate agency solicitations are issued at established times. Federal agencies with extramural R&D budgets of more than $1 billion are required to administer the Small Business Technology Transfer (STTR) program using an annual set-aside of 0.30 percent. The STTR program was created in 1992 to encourage commercialization of university and Federal laboratory R&D by small companies by providing funding for research proposals that are developed cooperatively between a small firm and a scientist in a research organization.

Phases: The SBIR grant-making process is structured in three distinct phases to achieve the program’s goals: Phase I grants, currently $100,000 per award for 6 months, are feasibility studies focused on limited research aimed at establishing an idea’s scientific and commercial promise; Phase II grants, currently $750,000 per award for 2 years, fund more extensive R&D to further develop the scientific merit and commercial potential of the research ideas. Phase III does not normally involve SBIR Federal funds but is the stage at which grant recipients should be obtaining additional funds from either a procurement program at an agency, private investors, or capital markets. The objective of Phase III is to move technology to the prototype stage and into the marketplace while leveraging Federal investments.

While The National Institutes of Health (NIH) does not fund Phase III award. The National Cancer Institute (NCI) recently announced a new program to create a bridge between Phase II and Phase III awards. To learn more about this program click here.

On March 4, 2011, Senator Mary Landrieu (D-LA) introduced S. 493, the SBIR/STTR Reauthorization Act of 2011. Similar to the compromise bill (S. 4053/S. 1233) passed by the Senate at the close of the 111th Congress, S. 493 would reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer Programs (STTR) for 8 years; increase the SBIR set aside to 3.5 percent over 10 years and increase the STTR set aside to 0.6 percent over six years; and allow small business concerns majority-owned and controlled by venture capital firms to be eligible for up to 25 percent of the SBIR funds. In addition, the bill would increase SBIR/STTR awards to $150,000 for Phase I and $1 million for Phase II awards; limit award increases to 50 percent according to the guidelines for Phase I and Phase II awards; and require that federal agencies shorten the time span for final decisions to not more than 90 days after the date a solicitation closes. The bill was referred to the Committee on Small Business and Entrepreneurship. (source: OLPA, the Office of Legislative Policy and Analysis)

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This entry was posted on Sunday, November 13th, 2011 at 6:52 pm and is filed under Growth, Innovation. You can follow any responses to this entry through the RSS 2.0 feed.
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